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General Dynamics Corporation (NYSE:GD)‘ earnings report this past week continued a trend of stronger-than-expected results out of America’s defense contractors. Make sure to read that with the emphasis on “than expected,” however — because objectively speaking, the news really wasn’t that great.

Earnings per share grew barely more than 2% year over year, and while that did in fact beat analyst estimates, management had to do some aggressive rounding up to claim its headline number of “2.3 percent” growth. In fact, net profits at the company increased less than 1%, and the stronger per-share performance owed largely to stock buybacks. Revenues, meanwhile, actually declined a small fraction of one percent, to $7.9 billion.

Second verse, same as the firstDon’t expect to see that situation improve much any time soon. In its press release, General Dynamics Corporation (NYSE:GD) noted that it ended Q2 with total backlog of $49.4 billion. Adding to the estimated work that the company will receive from ongoing indefinite delivery, indefinite quantity contracts and as-yet unexercised options on contracts it’s won, management figures its total, real backlog is probably close to $77.1 billion.

What management didn’t mention was that a year ago, it was estimating total backlog at more than $78 billion. With backlog shrinking, there’s less work to be done in the future. Consequently, you can expect the company to book fewer revenues going forward as well.

ValuationFree cash flow at the firm weakened significantly, with H1 cash profits now trailing reported net income by a good 24.5%. (Put another way, for every $1 in “net profit” the company says it’s earning, General Dynamics Corporation (NYSE:GD) actually collected only about $0.76.)